Top 5 Tips for a Headache-Free SBA Coronavirus Disaster Loan Application

Let's face it every business owner despises forms and applications especially when it comes to loans and money. Couple that with unchartered territory related to the Coronavirus and you may have an ultra low band width to complete the form.

Here are the Top 5 TIps to get the form complete as fast as possible with the fewest headaches.

• APPLY for Disaster Loan HERE
• CHECK Current Declared Disaster Areas HERE
• QUICK Summary of Terms is HERE
• SMALL Business size standards can be found HERE

TOP 5 Headache-Free Tips:

1) START at the right time of day or night:

Per the SBAs own application portal the recommended hours to complete the application are 7am to 7pm EST or 10am to 10pm PST.  This warning is true because we pulled our hair out attempting this the first time.

You may get into the application process but you are likely to get kicked out and have to start over. Don't put this stress on yourself. (see screenshot of hours below). You are also constantly prompted to click the save button and get signed out or kicked out from too much web traffic. Use this energy to gather docs needed. 

The best HOURS to complete the app are the OPPOSITE of the peak hours. Have a nice dinner and get ready to start at 7pm EST (or later). Alternatively get up at 5am EST or earlier and start the process. 

In addition be prepared to do this in 2 rounds. You may have to gather additional information and come back another time. Round 1 could be in the evening followed by round 2 in the morning for example. 

2) TIME is of the essence:

SBA Disaster Loan applications are going to skyrocket and a slew of businesses will submit applications because everyone is hoping to qualify even though many will not get loans. We are in a global and national emergency and "stay at home" and "shelter in place" orders are crippling businesses.

The cash flow drought motivates people to survive and SBA relief is front and center. You need to be in the front of this line rather than the rear. If applications pile up processing could get slowed down but at the same time businesses are hurting so the usual red tape may be a green light to process faster than normal. You may have a rare chance to get through the process with less scrutiny as well.

All in all your best chances are to submit as fast as possible.  

3) QUIRKS in the application: 

As with any application and especially an online version, there are quirks you have to navigate through to completion. Here are a few examples and ways to handle the situation if you encounter it. 

a)  Supporting documents (pdfs of tax returns etc) may upload and show complete but then the upload disappears. If this happens just complete all other sections and upload again just before submitting and hopefully the full application will complete. 

b) If you, as the owner of the business applying for an SBA Coronavirus Disaster Loan, also own other LLCs, Corps etc then you have to check yes in the applicable section of Form 5.

Affiliates information fields will appear to provide information about those other businesses. These should match up to the LLCs reported on Schedule C or from K-1's from 1065s or 1120S tax returns. Also provide ownership in any C-Corps. 

Your role (ie managing member, controller, president etc.) has to be selected from a dropdown box and those roles automatically select the Tax Return type filed for that entity. (ie 1065, 1120S etc.) 

HOWEVER, there is not dropdown box for a SINGLE Member LLC (a Schedule C filer). LLC owners are members and the only selection is "Managing member" which is the most accurate. Unfortunately this populates Form 1065 as the tax return filed. This is not correct for SINGLE Member LLCs so they this will likely result in an inquiry to clarify even though they should be able to figure it out.

c) They are no additional boxes or fields to provide additional explanations. (there should be in every section) Form 5 Box #22 is a blank field so include explanation here. Unfortunately it's limited to 260 characters (hopefully your tweeting skills help here) 

d) Business income is broken into 4 sections, salary, net investment income, real estate income and other income. The fields do not allow negatives they can only be positive numbers. If you have a loss then you have to enter zero in these fields. Real estate for example often operates at a taxable loss. 

4) INCOME timing and what to report: 

You have to complete a Personal Financial Statement (PFS) section. This reflects all assets, liabilities and income you have as an individual. Business income is reported in another section.  You may have good numbers that reflect the end of the calendar year and others which reflect the current month or some that are 6 months old. The form allows to select a date and 12-31-19 or 1-1-20 (end of the year) may work best) This will likely best reflect the numbers you have overall. 

If you haven't completed 2019 tax returns then you will need a Profit & Loss statement for the applicant business. 

Tax return transcripts are only looking for 2018 returns and prior because 2019 has been extended so don't worry about 2019 tax returns for this exercise. 

5) ESTIMATE any numbers in GOOD FAITH:

 As will anything and especially with tax returns and loan applications provide information in good faith. Yes you can estimate and doing so in the normal course of business. but don't make op numbers that are not reasonable withhold numbers because you are desperate. You don't want to get in hot water. 

An attorney I admire greatly once told me, "Just remember the New York Times Test." If you'd be okay having anything you say or write or otherwise provide be on the front cover of the New York Times, then that is your litmus test for acting in good faith.

 Good luck. 

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